Italian and Spanish 10-year bond yields — both north of 6 per cent at pixel time (chart via Reuters):
Since Italian political risk isn’t a factor this time, we assume this is evidence of that “liquid proxy for eurozone break-up” factor? That obviously isn’t sustainable for much longer. We’d note no one seems to be buying France after selling Italy or Spain either. Interesting.
Update (1315 UK time) — There’s been a call from ZH CB not to emphasise the benchmark yields or spreads to Bunds, versus the movement within the Italian and Spanish yield curves. Fair enough (although we think the yields still matter to debt sustainability) and there are some extreme results. The spread between Spanish 10-year and 30-year bonds is below 25bps, heading back to flattening last seen in late 2008-early 2009. The Italian 10-30 spread is also flattening markedly, to below 40bps at pixel time. Further recent yield curve movements for both sovereigns here.
Inversion, anyone?
Related link:
BTPs, the ECB and SMP - FT Alphaville